Although the Hawaii State Legislature passed the “Uniform Real Property Transfer on Death Act” in 2011, it is still not widely known or used, though it is an easy and less expensive way to pass property on to your heirs without having to go through an expensive and time-consuming probate process. Currently, 24 other states, plus the District of Columbia, also allow this type of deed.
Under this law, you can have a lawyer re-title your real property with the phrase “T.O.D. to [name of beneficiary or beneficiaries]” after your name. You still own the property and can do as you wish with it, but when you die, it automatically passes to the named beneficiary without having to go through probate.
A few important details to note:
- If desired, you can always later modify T.O.D. deeds to either remove or add named heirs.
- If you have an outstanding mortgage, the T.O.D. law has provisions to pass this obligation on to the heirs named in the T.O.D. deed.
- Having a T.O.D. deed does not rule out the common sense need for also having a legal Will for distribution of other assets to intended heirs.
- T.O.D. deeds override what is stated in a legal Will regarding distribution of real property in Hawaii
Costs of Preparing a TOD
Preparing a T.O.D. deed should cost about the same as you would expect to pay for any simple deed (a couple of hundred dollars, depending on complexity) plus the standard $25 or $30 to have it recorded with the Bureau of Conveyances.
Some individuals or married couples may wish to set up a Living Trust because of special issues, complex estates, or specific desires in the subsequent management and distribution of their estate following their death. Setting up a Living Trust can run into the thousands of dollars, may require revisions from time to time, and could add complexity for heirs in handling the estate. Some people may find they need to use a combination of estate planning tools (legal Will, Living Trust, and T.O.D. deeds) to meet their estate planning needs. But, for simple estates, it certainly is worth looking into a T.O.D. deed for passing on property.
For further information on T.O.D. deeds, see the full text of the law here.
*This post is intended for information purposes only and should not be construed as legal advice. Please consult with the a tax professional and/or legal counsel to determine what course of action is best for you.